The housing sector in Patna not only has a direct contribution to the GDP, but it also has a positive impact on the other sectors in the economy. As per LIC Housing Finance Limited (LICHFL), 78% of the sum spent on construction of a housing unit gets added back directly to the GDP. This impact is thus seen on all the building material suppliers, like cement, steel sand, timber to name a few, architectural and interior designer spending, landscaping and even financing institutions. According to the National Housing Bank, in terms of total linkage effect in the economy, the housing sector ranks fourth in the total economy and third among 14 major industries. Further, considering both forward and backward linkages, over 300 other ancillary industries are linked to the housing construction sector, thus drawing in investments and creating jobs at several levels in these industries as well. An industry deficient state like Bihar therefore cannot ignore a full-fledged development of Housing in Patna.
Importantly, the past experience of reforms (1998-1999) in taxation showed that investments in the development of housing (such as exemption of Income Tax under section 80 IA and 80 IB) can also create a multiplier effect on the economy, including an increase in tax revenues for the Government and employment in general. For instance, certain exemptions under Income Tax Act and the introduction of a National Housing Policy whereby the Stamp Duties across States were rationalized resulted in increased construction activity and generated employment contributing to the economic growth. For example, there was a huge increase in IT-ITeS commercial building supply, which could sustain the remarkable growth and evolution of the IT-ITeS industry in the country catapulting it to the foremost outsourcing destination in the world. But housing in Patna is devoid of this result which has benefited many parts of our country. Housing in Patna needs to catch up and sooner the better it is for Patna.
As per the respective countries’ government agencies, in the U.S.A the housing multiplier effect, considering direct, indirect and induced effects, ranges from 1.3 to 1.6, in Ireland it ranges from1.4 to1.7; in Australia construction sector multiplier is around 2.9. Apart from the multiplier effect of the housing sector, the non-monetary impacts like social and environmental benefits, health and hygiene benefits and eradication of homelessness have significant multiplier effect in improving the quality of living in any country and Housing in Patna needs to strive for the same..
One thought on “Housing in Patna and its Multiplier Effect on Other sectors.”